Japan
Taxation in Japan
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Taxation in Japan
Income Tax
While you live in Japan, it is necessary to pay income tax. When you work for companies and organisations in Japan, the income tax is already deducted at source from your salary. If you are self-employed you will need to file a final tax return.
Taxable income (Yen) Tax Rate Deduction (Yen)
0 – 1,950,000 5%
1,950,000 – 3,300,000 10% 97,500
3,300,000 – 6,950,000 20% 427,500
6,950,000 – 9,000,000 23% 636,000
9,000,000 – 18,000,000 33% 1,536,000
Above 18,000,000 40% 2,796,000
Inhabitant Tax
This tax is charged in the middle of the year to those who lived in Japan on the 1st of January of the same year. The calculation of its amount is based on your previous year's income. Therefore if you didn't have any income the year before, there will be no inhabitant tax to pay. In some cases, the inhabitant tax is withheld from your salary by your employer.
Corporate Tax
Japan coporate tax is 40%.
Corporations engaged in economic activities in Japan are subject to taxes on the profits that they generate. Foreign corporations with a business through a branch office are subject to corporation tax on their entire income sources in Japan. Foreign corporations carrying on business not through permanent establishments but through an agent in Japan are subject to corporation tax on the income derived from a business in Japan.
Foreign taxation deductions are available whereby taxes paid in a foreign country may be deducted from Japanese taxes owed in order to avoid double taxation between the source country of income and Japan. Measures have also been put in place to avoid double taxation internationally of Japanese branches of foreign corporations, for example, only certain income generated within Japan is subject to taxation in Japan.